Fewer deals, bigger bets: climate tech in autumn 2026

Climate tech investment has held up in 2026, but it looks very different from the boom years. The first-half reports from Currence, Net Zero Insights and Sightline Climate agree: more money is going to fewer companies, in larger rounds, across a narrower set of themes.

TL;DR

  • Climate venture funding reached $26.1bn in H1 2026, up 55% year on year, but the number of deals fell to a record low. Rounds of $100m or more took about 65% of all funding.
  • Low-carbon data centres took 34% of global climate VC, up from 3% a year earlier, and most of the largest deals were outside the US.
  • Fervo and X-energy set IPO records, and the first half saw more exits than ever before.
  • Venture now attracts under 8% of new climate fund capital, and carbon removal funding fell 61%.
  • Europe leads on raising climate funds, but the US raises far more for its companies. The UK has slipped to third, behind China.
  • Once founders reach the market, winning customers becomes their biggest challenge.

Record money, record-low deal count

The headline figure depends on who is counting. Currence puts climate venture investment at $26.1bn for the first half of 2026, the strongest first half since 2022. Net Zero Insights, which also counts debt and grants, puts the total at $41.3bn, broadly flat on last year.

The differences come down to methodology, but the direction is the same. Currence recorded 25% fewer deals than a year ago, and Net Zero Insights says the deal count is the lowest it has ever tracked. The average round rose to about $27m. Investors are writing bigger cheques, and far fewer of them.

Data centres lead, and not only in the US

The biggest single driver is data centres. Low-carbon data centres took 34% of global climate venture funding in the first half, and Built Environment has overtaken Energy as the largest vertical. Two deals make up a quarter of the market on their own: DayOne's $4.5bn Series C and Nscale's $2bn Series C.

Much of this is happening outside the US. DayOne is building across Southeast Asia on long-term renewable contracts, and Nscale sited its first facilities around Norway's surplus hydropower. Large infrastructure investors have been financing US data centres with debt and project finance, which has pushed venture investors towards developers in Europe and Asia.

What makes data centres so important for climate tech is speed to power. A Currence report produced with HSBC found developers paying up to $150/MWh for power that is clean, firm and quickly available, against a benchmark of about $100/MWh. That premium is now funding first-of-a-kind geothermal, advanced nuclear and long-duration storage projects.

Clean firm power goes public

The same demand has reopened public markets. Fervo's $1.9bn geothermal IPO and X-energy's $1.0bn nuclear listing set records for their sectors. Public investors have been less patient since, and both stocks now trade 35 to 40% below their IPO price.

Investors are also backing nuclear much earlier. Inertia raised $450m and Blue Energy $380m, both at Series A, years before either technology reaches the grid.

The squeeze in the middle

Further down the stack, conditions are harder. Sightline Climate's Dry Powder report shows record fundraising in 2025, with $92bn closed across 179 funds, but infrastructure funds took 77% of new capital. Venture's share has fallen from about 20% in 2021 to under 8%, and only 39% of targeted VC capital actually closed. Sightline warns of "zombie VCs" that reached a first close but cannot follow on, leaving portfolio companies stranded between Series A and B.

Founders feel it. In the 2026 founder survey by CTVC and Elemental Impact, 73% named capital structure as their biggest financing challenge, and 43% said access to project capital had worsened over the past year, against 32% who said it had improved. Many are raising to build instead: debt has grown from a rounding error in 2021 to about a quarter of all climate tech funding.

Winners and losers

The squeeze is sharpest in carbon removal. Equity funding for the Carbon vertical fell 61% to its lowest level since 2020, and low-carbon fuels dropped 56%. Among carbon removal founders, 64% said capital access had worsened, while 83% of nuclear founders said it had improved. Microsoft's decision in the spring to pause purchases of new carbon removal credits hit the market hard.

Adaptation and monitoring moved the other way. Earth observation funding tripled, led by ICEYE's $521m round, as physical climate risk becomes something businesses must manage now rather than plan for.

Europe raises the funds, the US builds the companies

Europe overtook the US on climate fund closes in 2025, with $61bn against $37bn, and European managers accounted for around 70% of new climate funds raised in the first half of 2026. Europe's close rate of 52% is being held back largely by the European Commission's $5.8bn Scaleup Europe Fund, which has yet to announce a close.

For companies, the picture is reversed. The US raised $13.5bn in equity in the first half, more than the next four countries combined. China has moved into second with $3.2bn, pushing the UK into third at $1.9bn, down 34% on the previous half. London is fifth among cities, behind four US hubs. The UK clearly has the capital to raise funds. The harder task is turning it into large rounds for home-grown companies.

The next bottleneck: customers

Capital is only part of the problem. When the founder survey asked what else was holding companies back, technology scale-up came first at 26%, followed by winning customers and offtakers at 20%. At the early commercial stage, signing customers becomes the main concern, named by 52% of founders.

This matters because offtake is fast becoming the currency of the market. The HSBC and Currence report found that a firm offtake agreement is the single biggest factor in whether a first-of-a-kind project can access finance beyond grants and venture capital. Corporates that commit early help shape the product and secure supply before prices rise. Startups that bring in a first buyer find the second and third contracts easier to win. As the survey concludes, founders need deployment partners as well as investors.

Where the Innovation Zero Awards come in

The Innovation Zero Awards were created to close this gap. The programme puts purchase-ready climate technology in front of people who make corporate procurement and investment decisions every day, across six categories: Energy & Power, Industry, MRV, Land & Water, Transport & Logistics, and Built Environment. Companies enter one of two streams: Mature, for technologies at TRL 7 to 9, and Promising, for TRL 4 to 6. That way younger companies are judged alongside their peers. Selected candidates can also be matched with a mentor from the judging panel, an industry expert who can advise on strategy, from pricing a first offtake to preparing for a corporate pilot.

The market has not dried up, but it has become more selective. The companies that raise in 2027 will be the ones that can show real customers and a credible route to deployment.

Applications for the 2027 Awards will open soon. Please express your interest to get involved here 

Further reading

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